25 October 2004 LAWFUEL – Law, securities law, legal, attorney newsAllen & Overy represented Eurohypo AG London branch (Eurohypo) and The Royal Bank of Scotland plc (RBS) as joint arrangers of a £300,000,000 commercial mortgage-backed securitisation by Epic Opera (Arlington) plc, a joint venture between the conduit lending practices of Eurohypo and RBS. The deal represents the third issue by Eurohypo under its Opera programme and the second issue by RBS under its Epic programme.
The transaction was the first securitisation for a non-SPV borrower which relies on the complex “over-reaching” structure; this allows bondholders to benefit ultimately from a property holding structure which removes the risk of an administration moratorium on the enforcement of security. Over-reaching mechanisms have been successfully employed before in a few securitisation transactions but typically with SPV borrowers.
The issue, which was tranched into five classes of sterling investment grade debt (rated AAA through to BBB), closed on 22 October 2004 and involved the origination and sale of a loan made by both banks to the Arlington Business Parks Partnership, an English limited partnership. The loan was secured over a portfolio of high-quality business park properties in England and Wales.
The A&O securitisation team was led by partner Christian Lambie, assisted by Aiden Small and Kerry Wardle, and partner Mark O’Neill, assisted by Alex Yurkowski and advised the banks on the origination of the loan.
Christian Lambie commented, “Working on a joint conduit lending deal posed some interesting challenges to ensure that the requirements of each bank’s programme were met. In addition, being able to demonstrate successfully to the markets that the over-reaching structure works in the context of non-SPV property funds adds further flexibility to the financing solutions available to real estate funds. Our continued work with the key players in the market once again demonstrates Allen & Overy’s role as one of the leading legal practices for CMBS transactions.”
Allen & Overy also acted for RBS and UBS as underwriters of the bond issue and, through partner Morgan Krone, for Bank of New York as trustee. Denton Wilde Sapte acted for Epic Opera (Arlington) plc.
For further information, please contact Caroline Livesey (caroline.livesey@allenovery.com) in London on +44 20 7330 4380.